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Drew Springer - Dollars & Sense
Who Needs a Wealth Manager? Answer: Anyone with Wealth.
By DREW SPRINGER, Springer Financial Services
Question:
Who Needs a Wealth Manager?
Answer:
Anyone Who Has Wealth, Wants to Grow Their Wealth
or Wants To Build Wealth.
Why shouldn’t people manage their own money?
Long-term investing requires rigorous discipline.
Most people are tied to their own money with rigorous
emotion, and that is because their financial well-being
is vitally important to them. However, when investment
decisions are influenced by personal emotion, bad deci-
sions can be made.
Most people that manage their own money either
buy mutual funds or they play the stock market. When
the market takes a dip, people emotionally tied to their
own money tend to panic. Then the market goes up, and
people emotionally tied to their own money tend to get
excited. Professionals help investors mitigate this emotion
and maintain their objectives and provide guidance.
Sometimes people make a little money, and then they
tend to give into a temptation to sell. If an investment
goes down, they tend to want to ride it out until they get
back to even. Some ride a stock all the way down to zero
hoping for a bounce back. Emotional investors will get
excited on the ups and depressed on the downs. Most
people that have managed their own money have done
all of those things. This illustrates why a money manager
is needed. A money manager does not have to contend
with emotion; they remove emotion from the investment
equation.
What should you look for in a money manager?
Look for a professional that works for you, not some-
one that works for a large company that requires them to
make xyz in commissions or else they will get fired. You
need someone who is a fiduciary that is dedicated to you,
not someone that puts their company or their own pock-
etbook first. Be aware of fees; it always behooves you to
watch the cost.
It is understandable that people try to find the cheap-
est way to make money, but it is just as important to find
someone you can depend on and trust. Steer clear of
high cost funds and use managers that can buy stocks or
ETF’s directly. Find someone who will explain all of these
costs and who will talk with you face to face. Find some-
one who values you and takes time to work with you.
You will want this person to have discretion over your
account and to make decisions for your benefit – trust is
paramount.
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Practical Application
As of this writing, Apple, as a company, is valued at
about $860 billion. I can’t afford to buy the $860 billion-
dollar company, but I can afford a share of their common
stock. If Apple sells enough iPhones, iPads and Macs,
I have a chance to make some money. My approach
to money management is to buy shares in a basket of
companies that I know and like. By owning shares, I get
to own a small piece of each of these great companies.
I was in Ireland last month. Each time I swiped my
Visa or MasterCard I was generating a little bit of revenue
for a couple more companies shares that I own, giving
me the opportunity to participate in the potential upside
of their stock. After Hurricane Harvey hit, I bought shares
in one of the largest sheet rock companies in America, a
building materials company, two RV manufacturers and
a large home builder in the Houston area. If you have a
savvy wealth manager, they probably did something simi-
lar. While there are never any guarantees, investments
like these are what have made money over time.
I caution people on going the cheapest route. You
want someone to take care of your money and your inter-
ests. As for some mutual funds and annuities, they are
great for college funds and retirements – your broker’s
college fund and his retirement, not yours. Funds and
annuities can charge high commissions that may not be
in your best interest – it goes back to working with some-
one you can trust as paramount to your success.